treatment of consolidation difference and their treat. In this treatment are show of payment method, net assets and treatment of goodwill and technique of consolidation

1. SEMINAR ON INTERNATIOAL
ACCOUNTING
TOPIC- TREATMENT OF
CONSOLIDATION DIFFERENCE
AND THEIR TREAT.
SUBMITTED TO :- PRESENTED BY:-
DR. P.D.SAINI SIR HARSH JAIN
M.COM IST SEM
D.E.I COLLEGE

2. CONTENT :-
MEANING OF CONSOLIDATION
ACCOUNTING TREATMENT (US GAAP)
TREATMENT – PURCHASE OF NET
ASSETS
TREATMENT - PURCHASE OF COMMON
STOCK
TREATMENT OF GOODWILL
TECHNIQUES OF CONSOLIDATION

3. MEANING OF
CONSOLIDATION
 In business, consolidation or amalgamation is
the merger and acquisition of many
smaller companies into much larger ones. In
the context of financial
accounting, consolidation refers to the
aggregation of financial statements of a
group company as consolidated financial
statements. The taxation term of
consolidation refers to the treatment of
a group of companies and other entities as
one entity for tax purposes. There may be
amalgamations, either by transfer of two or
more undertakings to a new company, or to
the transfer of one or more companies to an
existing company".

4. ACCOUNTING
TREATMENT (US GAAP)
A parent company can acquire another company
by purchasing its net assets or by purchasing a
majority share of its common stock. Regardless
of the method of acquisition; direct costs, costs
of issuing securities and indirect costs are
treated as follows:
 Direct costs, Indirect and general costs: the
acquiring company expenses all acquisition
related costs as they are incurred.
 Costs of issuing securities: these costs reduce
the issuing price of the stock.

5. TREATMENT – PURCHASE
OF NET ASSETS
 Treatment to the acquiring company: When
purchasing the net assets the acquiring company records
in its books the receipt of the net assets and the
disbursement of cash, the creation of a liability or the
issuance of stock as a form of payment for the transfer.
 Treatment to the acquired company: The acquired
company records in its books the elimination of its net
assets and the receipt of cash, receivables or investment
in the acquiring company . If the acquired company is
liquidated then the company needs an additional entry
to distribute the remaining assets to its shareholders.

6. TREATMENT - PURCHASE
OF COMMON STOCK
 Treatment to the purchasing company: When the
purchasing company acquires the subsidiary through the
purchase of its common stock, it records in its books the
investment in the acquired company and the
disbursement of the payment for the stock acquired.
 Treatment to the acquired company: The acquired
company records in its books the receipt of the payment
from the acquiring company and the issuance of stock.

7. TREATMENT OF
GOODWILL
 If Non-Controlling Interest (NCI) based on
fair value of identifiable assets: impairment
taken against parent's income & R/E.
 If NCI based on fair value of purchase price:
impairment taken against subsidiary's income &
R/E.

8. TECHNIQUES OF
CONSOLIDATION
LINE BY LINE
CONSOLIDATION
ONE LINE CONSOLIDATION
PRORATE CONSOLIDATION

9. THANK YOU